SYDNEY -(MarketWatch)- Coalspur Mines Ltd. (CPL.AU) said Monday that its proposed C$1.23 billion (US$1.23 billion) Vista mine in Canada may produce 24% more coal than previously thought, as the company moves to lock in project financing with offtakers.

Coalspur said a detailed study showed that the Vista project, near Hinton in Alberta province, could have an annual production capacity of 11.2 million tons of thermal coal versus a previous estimate of 9 million tons. Thermal coal is chiefly used for power generation.

"The growing demand for thermal coal in the Asian Pacific economies continues to support the underlying fundamentals required to proceed with the development of Vista," Gene Wusaty, chief executive of Coalspur, said in a statement.

Calgary-based Coalspur expects construction to begin in early 2013, once regulatory approvals are in place and detailed engineering has been completed.

Coalspur's shares have risen from A$0.33 at the start of 2009 to A$1.85 currently, giving it a market value of A$1.07 billion--underscoring that investors are increasingly interested in firms, such as Coalspur, operating in established coal-producing regions with good access to rail and port facilities.

Sherritt International Corp.
SHERF, -4.07%
operates the producing Coal Valley and Obed mines, which are 60 kilometers and 10 kilometers, respectively, from Coalspur's project. Thermal coal from those mines has been sold to buyers in Japan and Korea since the 1980s, and are increasingly being shipped to China.

Coalspur plans to develop the Vista project in phases--with initial annual output of 5 million tons starting in 2015--before ramping up to full capacity three years later.

Development costs for the first phase are estimated at C$864 million, with the balance C$370 million required to bring the mine up to maximum capacity, the company said.

Coal from the Vista project will be railed to the Ridley Terminals at the port of Prince Rupert in western Canada, where Coalspur has secured handling capacity of up to 8.5 million tons annually for up to 21 years.

Coalspur said it aims to secure additional port capacity and to turn an initial haulage deal with Canadian National Railway Co.
CNI, +0.60%
into a definitive agreement over the coming year.

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